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Best Practice: Spotting the H4R in EURGBP

Tweet on 27 Mar 2014

 

Conditions of a H4R

  • Strong resistance that is obvious (Reversal towards Bearishness)
  • Possible reversal Chart pattern seen near resistance
  • H4 Expansion in the opposite way from trend (In this case, a Bearish H4 expansion is seen)
Obvious Resistance of a previous year low in EURGBP

Obvious Resistance of a previous year low in EURGBP

Conditions of H4R seen on EURGBP H4 charts

Conditions of H4R seen on EURGBP H4 charts

  • Price has since closed below several H4 boxes high.
  • Any retracement back to these highs could see them as resistance.

Next Support levels on Big Picture

Using the charts on the higher timeframe, we can predict the next possible support levels.

Next Support Levels on EURGBP Weekly Charts

Next Support Levels on EURGBP Weekly Charts

Update by Jerome 1st Apr 2014: EWUS pointed out by Daniel (@dk87888)

Possible EWUS in EURGBP

Possible EWUS in EURGBP

Criteria for EWUS

  • D1 and above time frame
  • Price must retrace up to a min of Fib6 of the smaller flow.

At the moment, price has already turned up at the Fib6 support. Based on the H4R strategy mentioned in this post, if price were to continue to come down and break beyond the Fib6 support, there is a chance it could retest the lower level of the support zone.

Update (2nd Apr 2014 by Jerome)

Current H4 chart on EURGBP shows 1234 pattern 2 Apr 2014

Current H4 chart on EURGBP shows 1234 pattern 2 Apr 2014

Resistance for Point 4 can be see on higher timeframe

Resistance for Point 4 can be see on higher timeframe

  • H4 shows possible 1234 pattern which matches criteria of 1234 seen with boxes
    • Point 2 at box high
    • Point 2 & Point 4 at different boxes
    • Point 4 at strong resistance made of confluence of:
      • Previous Boxes High/Low
      • Fib-R of flow levels
      • Turning points on higher timeframe

Currently the possible point 4 matches up with a F3 level of the downflow, there is no condition that a deeper retracement of a Fib level (F6,F7,F8) will result in a better trade then one that is shallow (F2,F3) or vice versa.

When the current strength of price in a certain direction is strong then its retracement might be shallow.

Price ultimately needs to close below the lowest of the H1 boxes low and subsequently below F6 (Fib-R from pt1 to pt4) for it to be able to head lower.

 Update 16 April 2014 by Jerome

Addressing question by student on if trading the WRMB found two weeks back was correct and how to have managed it.

EURGBP - Previous WRMB Setup

EURGBP – Previous WRMB Setup

  • Following the bearish expansion, price retraced to form a 1234 pattern.
  • After crossing point 1, price did a WRMB of previous 2 H4 boxes low.
    • The TP area for this WRMB should have been the high of the range. However as the high of the range is not equal, using the lower value for trade management would have been prudent.
  • Based on the previous H4 boxes, there is still not sign of price turning up yet as there has been no higher highs formed by the H4 boxes.

Last time, many things that I wanted were just dreams, now I see them as possibilities. I’m looking forward to own pent-house suite in Manhattan overlooking Central Park because forex trading with Tflow® makes it possible. Find me on Google+

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2 thoughts on “Best Practice: Spotting the H4R in EURGBP”

  1. Daniel Ku Guet Liang says:

    Thanks 师兄. 1 question though: do you think there is EWUS setup?

  2. William Ang Yong Ching says:

    Jerome, thanks for explanation.

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